Air New Zealand continues to experience strong demand on its domestic network, with the number of passengers carried in the first five months of 2007 up 5% on the previous equivalent period.

Demand has been driven by Air New Zealand's decision to reduce domestic fares by up to 26% at the start of the year, the huge success of selling heavily discounted fares at www.grabaseat.co.nz and a number of initiatives such as the Mothers Day sale and Kids Fly Free promotion for the July school holidays, General Manager Domestic Airline Bruce Parton said on July 9.

He said meeting this increase in demand had proven challenging, given the global shortage of new jet aircraft and the typical requirement for airlines to place orders 4-5 years prior to deliver.

"We had previously indicated that we would acquire two additional 737 aircraft to boost domestic capacity, but had not expected to be able to complete this acquisition until late 2008. In the interim, we had announced our intention to add an additional row of seats into the existing 737 fleet to satisfy the growing demand."

"After much hard work we have been able to source these additional two aircraft six months ahead of schedule, with delivery planned for early next year. This will enable us to discontinue the programme to increase the seat count in our existing 737 aircraft and all aircraft will revert to the existing 136 seat configuration."